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Taxation of rental income on residential building
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heri
#1 Posted : Wednesday, June 26, 2013 10:59:35 AM
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I have noted that the ITA defines an industrial building in the second schedule 5 (1)(f) as:
a building in use as a rental residential building where such a building is constructed in a planned development area approved by the Minister for the time being responsible for matters relating to housing[/color]also Second schedule 1(e) says:in the case referred to in paragraph 5(1)f for the year commencingon or after 1
st January 2008, five per cent-

which means that a deduction of 5% on cost of building is allowed before computing tax due
What does the Act mean by referring to planned development area approved by the minister for housing above?

anyone who has been paying tax on rental property? are you making the 5% deduction on cost of construction?
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a4architect.com
#2 Posted : Wednesday, June 26, 2013 11:08:11 AM
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@heri..give us a link to the full legal chapter. Maybe then we can be able to see why an industrial building is being defined as a rental residential building.
As Iron Sharpens Iron, So one Man Sharpens Another.
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heri
#3 Posted : Wednesday, June 26, 2013 11:45:46 AM
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a4architect.com wrote:
@heri..give us a link to the full legal chapter. Maybe then we can be able to see why an industrial building is being defined as a rental residential building.
do you mind to look at the ITA second schedule starts on page 165
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Lolest!
#4 Posted : Wednesday, June 26, 2013 8:07:11 PM
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Landlords are filing these returns in ignorance. I wonder what details they are filling yet they didn't pay tax in 2012. KRA publicity dept deserves a bash
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maka
#5 Posted : Wednesday, June 26, 2013 8:36:01 PM
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Lolest! wrote:
Landlords are filing these returns in ignorance. I wonder what details they are filling yet they didn't pay tax in 2012. KRA publicity dept deserves a bash

wacha wakupate...
possunt quia posse videntur
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butterflyke
#6 Posted : Wednesday, June 26, 2013 10:32:35 PM
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maka wrote:
Lolest! wrote:
Landlords are filing these returns in ignorance. I wonder what details they are filling yet they didn't pay tax in 2012. KRA publicity dept deserves a bash

wacha wakupate...


@maka, can you advice on what landlords should do?
Float like a butterfly, sting like a bee. - Muhammad Ali🐝
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heri
#7 Posted : Thursday, June 27, 2013 9:18:22 AM
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[quote=heri] I have noted that the ITA defines an industrial building in the second schedule 5 (1)(f) as:
a building in use as a rental residential building where such a building is constructed in a planned development area approved by the Minister for the time being responsible for matters relating to housing[/color]also Second schedule 1(e) says:in the case referred to in paragraph 5(1)f for the year commencingon or after 1
st January 2008, five per cent-

which means that a deduction of 5% on cost of building is allowed before computing tax due
What does the Act mean by referring to planned development area approved by the minister for housing above?

anyone who has been paying tax on rental property? are you making the 5% deduction on cost of construction?[/any landlord in the house who knows whether it is okay to deduct the 5% of cost each year as allowable deduction before arriving at taxable rent? appreciate your help on this ]
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heri
#8 Posted : Thursday, June 27, 2013 9:20:30 AM
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Does any landlord or tax expert in the forum know if its okay to deduct 5% of the cost of construction from rent to arrive at taxable rent? from income tax second schedule, it seems to be the correct way of looking at it?

help appreciated?
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heri
#9 Posted : Thursday, July 04, 2013 6:46:53 PM
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Is it that people in the forum don't know the answer or you don't want to share knowledge

Please help
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sparkly
#10 Posted : Saturday, July 06, 2013 2:50:17 PM
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heri wrote:
Is it that people in the forum don't know the answer or you don't want to share knowledge

Please help


The rate of industrial building allowance for approved planned residential buildings is actually 25% meaning you can claim the full cost in 4years.

Applies to estates approved by the housing ministry.

The 25% is on the qualifying costs. This excludes price of land and the fittings.

You start claiming the 25% the first year of getting rent from the building.

You might end up in tax losses if you claim the allowance. Since you can only carry foward losses for 5 years, you will need to ask KRA to extend time of carrying forward the losses more than 5 years.

Any more questions?
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kazee
#11 Posted : Monday, December 15, 2014 9:56:15 AM
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XSK
#12 Posted : Monday, December 15, 2014 11:14:39 AM
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kazee wrote:
Tenants to pay KRA directly



Holy Mary mother of Jesus!
You will know that you have arrived when money and time are not mutually exclusive "events" in you life!
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butterflyke
#13 Posted : Monday, December 15, 2014 11:28:09 AM
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Kwisha!

The fishing net has been cast wide. Itashika mpaka omena.

So the rate will be flat at 3%?
Float like a butterfly, sting like a bee. - Muhammad Ali🐝
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mlennyma
#14 Posted : Monday, December 15, 2014 11:44:44 AM
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This will only hurt the tenants more by paying a vat like fee on your rent which the land lord will not agree to deduct, actually my thinking its a double taxation for tenant and landlord,it will also bring disputes and personal chaos between landlords and tenants.
"Don't let the fear of losing be greater than the excitement of winning."
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butterflyke
#15 Posted : Monday, December 15, 2014 12:25:27 PM
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mlennyma wrote:
This will only hurt the tenants more by paying a vat like fee on your rent which the land lord will not agree to deduct, actually my thinking its a double taxation for tenant and landlord,it will also bring disputes and personal chaos between landlords and tenants.


Good point
Float like a butterfly, sting like a bee. - Muhammad Ali🐝
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obiero
#16 Posted : Tuesday, December 16, 2014 7:01:33 PM
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XSK wrote:
kazee wrote:
Tenants to pay KRA directly



Holy Mary mother of Jesus!

Haha. XSK must not have been paying tax

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whiteowl
#17 Posted : Tuesday, December 16, 2014 7:21:40 PM
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kazee wrote:
Tenants to pay KRA directly

This is a load of crap and sheer laziness for KRA. Imagine if these shenanigans of double payments are extended to other taxable payments, I really wonder just how many deposits I'd be making in this "simplified" tax collection.
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mwania
#18 Posted : Wednesday, December 17, 2014 1:40:23 PM
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I think it is a good idea to do that.. i like the idea of a flat late.. i just hope they will make it a maximum of 10% of the total gross rent collections. We must pay taxes and the only thing they need to consider is the fact that they do not allow deduction of costs incurred while putting up the buildings so the tax should be much lower than the normal 30% income tax rate.. I would not mind paying 10% of the gross collections.
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Othelo
#19 Posted : Wednesday, December 17, 2014 1:45:54 PM
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mwania wrote:
I think it is a good idea to do that.. i like the idea of a flat late.. i just hope they will make it a maximum of 10% of the total gross rent collections. We must pay taxes and the only thing they need to consider is the fact that they do not allow deduction of costs incurred while putting up the buildings so the tax should be much lower than the normal 30% income tax rate.. I would not mind paying 10% of the gross collections.

smile
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XSK
#20 Posted : Wednesday, December 17, 2014 8:32:59 PM
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obiero wrote:
XSK wrote:
kazee wrote:
Tenants to pay KRA directly



Holy Mary mother of Jesus!

Haha. XSK must not have been paying tax


Mmmh
You will know that you have arrived when money and time are not mutually exclusive "events" in you life!
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